Soteris Pittas & Co L.L.C

SOTERIS PITTAS & CO LLC in cooperation with the UK Law Firm BRYAN CAVE LEIGHTON PAISNER, cohosted an accredited legal seminar on the subject “Challenges and Developments in the Cypriot Legal Market” that was held on Thursday, 7th of July 2022, at the Columbia Plaza Venue Center.

SOTERIS PITTAS & CO LLC is pleased to announce that as of the 01st of January 2023, our partner Mrs. Maria Pitta has been appointed as member on the Board of Directors of our Firm.

SOTERIS PITTAS & CO LLC is pleased to announce that as of the 01st of January 2023 Mrs. Anna Lamprou has been promoted to the position of Partner in our Firm.

Our firm is a Gold Sponsor of the very first Cyprus Arbitration Day hosted by the Cyprus Arbitration Forum (CAF). The Conference titled “Arbitrating Disputes in the Middle East at Times of Dynamic Geopolitical Changes”, will be held on the 22nd of May 2023 at Amathus Beach Hotel in Limassol.

On 22 November 2022, the European Court of Justice held that the general public’s access to information on beneficial ownership constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data and that the interference entailed by that measure is neither limited to what is strictly necessary nor proportionate to the objective pursued.

It is indisputable that over the years England has established itself as a go-to jurisdiction for implementing schemes of arrangements. This is due to inter alia the fact that English law permits overseas companies which are liable to be wound up under the UK Insolvency Act 1986, to take advantage (under certain circumstances) of the English legal regime applicable to schemes (see inter alia Re Rodenstock GmbH [2011] EWHC 1104 (Ch)).

In a recent decision of the District Court of Limassol in the context of an action filed by a foreign entity against local Banks, regarding the request of the Applicant for disclosure of information and documents, our law firm acted for the awarded with the discovery order, Swiss company.

The Minister of Finance of India decided on 14 June 2021, the inclusion of Cyprus in the first category of foreign investment funds. Cyprus has been classified as a ‘Category I’ country, being an approved jurisdiction where funds regulated in Cyprus can be used for the purposes of investing into Indian securities and this fact provides significant advantages for the Cypriot investment funds which will be able to invest more easily and efficiently in India. The Category I FPI includes entities from Financial Action Task Force (FATF) member countries or from any country specified by the Indian government by an order or by way of an agreement or treaty that are:

Under Cyprus Law, a pledgee, in the event of default of the pledgor, may:

A pledgee, under a Cypriot law pledge, who has in its possession the so called the Self-Enforcement Documents (i.e. original certificate of pledged shares, original duly signed and undated instrument of transfer of shares, original duly signed written resignations of the directors/secretary of the company, whose shares have been pledged to the pledgee, undated certificate duly signed by the secretary, that all filings to be made by new secretary are in compliance with the registers of the company etc.) is usually given by the terms of the relevant pledge agreement, the right and power, upon the happening of an Event of Enforcement, to inter alia proceed, without any further written notice to the pledgor, to put into effect the Self-Enforcement Documents, and to transfer the legal title of the pledged shares to the name of the pledgee or to its nominee, and to replace the directors and secretary of the company, whose shares have been pledged.

A pledgee, even if the pledge agreement provides that it can proceed to sell the pledged shares, without any prior notice to the pledgor, is obliged under Section 134 of Contract Law CAP. 149, to give to the pledgor, a reasonable written notice, about its intention to proceed to sell the pledged shares, thus giving the chance to the pledgor to exercise its equitable right to redeem, by setting all secured debt, and obligation and obtaining back the title of the pledged shares.

Confidentiality is one of the key characteristic and advantage of arbitration, which makes it so attractive to parties, as method of dispute resolution.

Under Cyprus Law, a pledgee, in the event of default of the pledgor, may:

A pledgee, under a Cypriot law pledge, who has in its possession the so called the Self-Enforcement Documents (i.e. original certificate of pledged shares, original duly signed and undated instrument of transfer of shares, original duly signed written resignations of the directors/secretary of the company, whose shares have been pledged to the pledgee, undated certificate duly signed by the secretary, that all filings to be made by new secretary are in compliance with the registers of the company etc.) is usually given by the terms of the relevant pledge agreement, the right and power, upon the happening of an Event of Enforcement, to inter alia proceed, without any further written notice to the pledgor, to put into effect the Self-Enforcement Documents, and to transfer the legal title of the pledged shares to the name of the pledgee or to its nominee, and to replace the directors and secretary of the company, whose shares have been pledged.

A pledgee, even if the pledge agreement provides that it can proceed to sell the pledged shares, without any prior notice to the pledgor, is obliged under Section 134 of Contract Law CAP. 149, to give to the pledgor, a reasonable written notice, about its intention to proceed to sell the pledged shares, thus giving the chance to the pledgor to exercise its equitable right to redeem, by setting all secured debt, and obligation and obtaining back the title of the pledged shares.

In the English case Stockman Interhold S.A. -v- Arricano Real Estate PLC (2017) EWHC 2909, the Court summarized the applicable legal principles for setting aside an arbitral award for fraud, as follows: The complainant, who seeks to the set aside an arbitral award for fraud, must demonstrate its case to a high standard of proof (see Elektrim -v- Vivendi (2007) EWHC 11 at paragraph 11). There must be a sufficient causative link, between the fraud, and the obtaining of the relevant arbitral award, which can be demonstrated in the following ways: There must have been “reprehensible or unconscionable conduct” that contributed in a substantial way to the obtaining of the award (see Double K Oil & Products Ltd -v- Neste Oil OYJ (2010) EWHC 3380 at paragraph 33). The applicant must show that the evidence relied on to demonstrate the fraud, would have had an important influence on the result of the arbitration (see Thyssen Canada Ltd -v- Mariana Maritime SA (2005) EWHC 219 at paragraph 60). It must also be shown, that the fraudulent conduct has caused substantial injustice in the sense that the fraud had an important influence on the award, and/or the result of the award, might realistically have been, or might well have been different, if the true facts had been known (see Mass -v- Musion (2015) EWHC 1346).

Types of available Alternative Investment Funds The available legal structures which can be used for Alternative Investment Funds (AIFs) established in Cyprus are the following: Registered Alternative Investment Funds (‘’RAIFs’’), in the form of Common Funds or Fixed/Variable Capital Investment Companies which are subject to the provisions of the Companies Law CAP. 113, or in the form of Limited Partnerships which are subject to the General and Limited Partnerships and Business Names Law CAP. 116. RAIFs do not provide limits on the number of investors that can take part nor do they provide for minimum capital requirements. However, RAIFs have to be managed by an external manager. While the other types of AIFs must first be authorized by the Cyprus Securities and Exchange Commission (“CySEC”) in order to operate, RAIFs only need to be registered with CySEC. Alternative Investment Funds with an unlimited number of persons (‘’AIFs’’), which can take any of the forms available to RAIFs. These do not provide for any limits on the number of investors that can take part, however, they do require the existence at all times of a minimum capital requirement of €125,000. This capital requirement applies to both self-managed AIFs as well as to AIFs which are externally managed. Alternative Investment Funds with a limited number of persons (‘’AIFLNPs’’), in the form of Fixed/Variable Capital Investment Companies or of Limited Partnerships. The maximum number of investors that can participate in an AIFLNP is 50 in total, regardless of whether the AIFLNP might operate as an umbrella fund with more than one investment compartment. In ascertaining the total number of investors, any shareholders of a company acting as an investor will also be calculated. In case an AIFLNP is managed externally there is no requirement for the existence of a minimum capital, but if same is self-managed then it must have at all times a minimum capital of €50,000. Characteristics of available legal structures for AIFs Common Fund (Unit trust) Is a form of a collective investment scheme regulated by contract law. Whilst the AIF Law does not expressly provide for the possibility of licensing or registration of a unit trust as an alternative investment fund, in contrast to other common law jurisdictions, it does provide for a variation of this known as a ‘common’ or ‘mutual’ fund. Under a common fund the fund itself is organised in practice as a contract between investors. Common funds have no legal form and are managed by an external manager. 2.2 Investment Company Any of the types of AIFs referred to in paragraph 1 above may take the form of an Investment Company. Such Investment Companies are established pursuant to the Companies Law CAP. 113, and they can take the form of either a Fixed Capital Investment Company (‘’FCIC’’) or a Variable Capital Investment Company (‘’VCIC’’). Regardless of the capital structure chosen, these enjoy the same benefits as common companies, meaning, they have a separate legal personality from their members, whose liability will be limited to their contribution to the capital of the company, and also they enjoy the favorable taxation rules applicable to companies established pursuant to the Companies Law CAP. 113. Overall, the majority of the AIFs which are established in Cyprus are structured in the form of an Investment Company. 2.3 Limited Partnership Any of the types of AIFs referred to in paragraph 1 above may take the form of a Limited Partnership established pursuant to the General and Limited Partnerships and Business Names Law CAP. 116. In essence, these are entities which require less formalities for their establishment. Regulatory Framework Applicable to AIFs The establishment as well as the operation of AIFs is regulated by the Alternative Investment Funds Law 124(I)/2018 (“AIF Law”) and by any secondary legislation issued by CySEC, which is the body responsible for authorizing the establishment and issuance of licenses to AIFs, as well as for making sure that AIFs comply and operate within the regulatory framework. Depending on the type and characteristics of the AIF, inter alia the following legislations/regulatory frameworks may be also applicable: The Companies Law CAP. 113; The General and Limited Partnerships and Business Names Law CAP. 116; The Alternative Investment Fund Managers Law of 2013 (Law 56(I)/2013) (‘’AIFM Law’’) and the European Directive 2011/61/EU (‘’AIFMD’’); The MiFID II Law (‘’MiFID II’’); The Small Alternative Investment Funds Managers Law of 2020 (Law 81(I)/2020); The Open-Ended Collective Investments Funds Law of 2012 (Law 78(I)/2012); Management of AIFs As already discussed above, AIFs can be either self-managed or externally managed, with the exception of RAIFs which can only be managed externally. The following entities are permitted to act as external managers of AIFs: A Cyprus Investment Firm, authorized by MiFID II; A Small Fund Manager, authorized by Law 81(I)/2020; A management company, authorized by Law 78(I)/2012; An Alternative Investment Fund Manager (‘’AIFM’’), pursuant to the AIFM Law; An AIFM established in a European Member State and which is duly authorized to act as such under the applicable legislations of that jurisdiction. The most common structure for managers is that of private limited companies. Who holds the funds/assets of the AIF? Pursuant to the AIF Law, the assets of the AIF have to be in the safekeeping of a depositary. In case the AIF or RAIF is internally managed then it can have a depositary which has either its registered office in Cyprus or abroad, and which is either an investment firm or a credit institution, or another type of institution established in a European Member State and which falls within the categories of institutions determined by Member States as permitted to act as depositary. In case the depositary has its registered office abroad, then the third country where the depositary has its registered office/its established, must not be designated by FATF as Non-Cooperative, it must have signed an agreement with the Republic of Cyprus in accordance with Article 26 of the OECD Model Tax Convention on Income and Capital, and it must ensure effective exchange of information on tax matters. Finally, the third country in which the depositary its registered must provide for supervision and prudential regulation, including requirements for the existence of a minimum capital. According to the AIFM Law, in case the AIF or RAIF in question is externally managed by an AIFM, then there is a need to appoint a depositary based in Cyprus. An AIFLNP does not need to have a depositary if the total assets of the fund are less than €5 million, or the number of investors is limited to five (5), or the portfolio consists of assets subject to custody whose value does not exceed 10% of the total assets of the fund and in such a case the maximum number of investors must be limited to 25 physical persons with each of these persons having invested at least €500,000. Lastly, depending on the investment policy of the AIF in question, if the assets it deals with are not subject to custody, then a depositary can be an entity providing such services within the context of its business activities, and for the performance of which is subject to an administrative authority, professional conduct rules, or is professionally registered according to law. Taxation Taxation of AIFs In case the AIF is structured as a limited partnership or a common fund, then the national laws of the residence of the investors will apply. In case that the AIF is structured as an investment company established pursuant to the Companies Law CAP. 113, then inter alia the following standard corporate taxation rules will apply: A corporate income tax rate of 12.5% on profits; Notional Interest Deduction regarding new equity may reduce the effective tax to be paid by up to 80%; Any fund management services provided to the AIF are not subject to VAT; Dividends are exempt from tax; Capital gain from sales of shares of a foreign company or from property abroad, are exempt from tax; Any profits from a sale of securities as well as any gains from trades of securities are exempt from tax; Each investment compartment of the AIF will be taxed separately; No subscription tax on the assets of the fund. Enjoy benefits under the various double tax treaties to which the Republic of Cyprus is a party. Taxation of Investors In case the Investor is a physical person who is both tax resident and domiciled in Cyprus, then there will be a withholding tax of 17% on dividends (this will not apply if the Investor is not domiciled in Cyprus or if he is a foreign investor). In case the Investor is a company there will be no withholding tax. Furthermore, regardless of whether the Investor is resident and/or domiciled in Cyprus or abroad, there will be no taxation on redemption of units. Lastly, in case the AIF is structured as a partnership or a common fund and the Investor is not resident in Cyprus, the Investor will be also exempted from any withholding tax on distributions and the national laws of the tax residency of the Investor will apply. The above constitutes a short overview of the framework concerning Alternative Investments Funds in Cyprus.

Confidentiality is one of the key characteristic and advantage of arbitration, which makes it so attractive to parties, as method of dispute resolution.

Generally, in international commercial arbitrations the remedy which is most commonly sought and which is usually granted, is that of damages, with only a relatively small percentage of the entirety of those awards providing for a remedy of specific performance. This is mainly due to the fact that ‘specific performance’ may be understood and dealt differently in common law and civil law jurisdictions, and which can give rise to difficulties in enforcement. In the context of English and Cyprus law, the term ‘specific performance’ is understood as a ‘remedy available in equity to compel a person actually to perform a contractual obligation’. Whether an arbitration tribunal has jurisdiction to grant an order for specific performance normally depends on the terms of the parties’ arbitration agreement. Nevertheless, as long as the remedy of specific performance is not excluded by agreement, it is generally accepted that an Arbitration Tribunal has the power to grant it.

A successful party in an arbitration may find the losing party unwilling to honor the arbitral award.

In the case of Re Nicolaou Bros Tourist Enterprises Ltd (1999) 1 AAD 201, the Supreme Court of Cyprus, by adopting English legal principles, recognized inter alia the jurisdiction of Cyprus Courts to grant Chabra type injunctions.

CYPRUS: LOCUS STANDING OF A FOREIGN LIQUIDATOR OR FOREIGN COURT APPOINTED INTERIM RECEIVER TO FILE COURTS PROCEEDINGS BEFORE CYPRUS COURT

In the case GDL TRADING LTD -V- AGROMARKETS LTD & OTHERS, the District Court of Nicosia inter alia held – (adopting English case law) - that the jurisdiction of the Courts to grant Chabra injunction, arises when:

Conspiracy is recognized in Cyprus as a common law tort.

CYPRUS: AN ANTISUIT INJUNCTION ISSUED BY AN ARBITRAL TRIBUNAL DOES NOT VIOLATE THE EU REGULATION 44/2001 (which has been replaced by EU Reg. 1215/12).

CYPRUS: JURISDICTION OF THE CYPRUS COURTS TO GRANT INTERIM RELIEF IN AID AND/OR IN SUPPORT OF PROCEEDINGS PENDING BEFORE THE COURTS OF MEMBER STATES, OR IN AID AND/OR IN SUPPORT OF FOREIGN ARBITRAL PROCEEDINGS

In the English case AXA EQUITY & LAW LIFE –V- NATIONAL WESTMINISTER BANK (1998) CHC 117 (which has been adopted and followed by Cypriot Courts), the Court refused disclosure on the basis that the claimant had already made out a prima facie case against the accountancy firm they were suing, and did not require Norwich Pharmacal disclosure to determine whether a case could be brought against them. The application therefore infringed the “mere witness rule” as the banks were compellable witness.

CYPRUS: A NORWICH PHARMACAL ORDER IS ISSUED WHEN THE APPLICANT SATISFIES THE COURT THAT THE INFORMATION REQUESTED ARE OF VITAL IMPORTANCE FOR THE FILING OF THE ACTION OR FOR PLEADING AND PROVING ITS CASE AND ALSO THAT THE APPLICANT COULD NOT COLLECT SAME FROM ANY OTHER SOURCE.

Deadlock at the Level of Board of Directors and the Power of the General Meeting to Act Despite Provisions in the Articles of Association Reserving the Matter for the Board

Section 211 (e) of Companies Law CAP. 113 (“CAP. 113”), provides inter alia for the winding up of a Cypriot Company when it is “insolvent”.

On the issue of attribution of knowledge of a person to a corporate entity, Cypriot Courts have in inter alia the cases of Police v Vasili Vasileiou Case no. 15408/07, 9/06/2008, The Republic v Rikkou Erotokritou & Others, Case No. 9208/15, 8/2/2017 and Kypros Kyprianou v Police, Criminal Appeal No. 234/2016, 13/02/2018, cited with approval the leading English cases on this matter, namely, the cases of Lennard's Carrying Co v Asiatic Petroleum Co [1915] AC 705, Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 and Jetivia v Bilta [2015] UKSC 23.

SOTERIS PITTAS & CO LLC is pleased to announce that as of the 23rd of December 2019, Mrs. Maria Pitta and Mrs. Evi Lamprou have been promoted as partners in our Firm.

The growing importance of cross border successions within the European Union and the difficulties and complications resulting from the diversity of succession and private international law rules relating to succession, prompted the European Commission to examine the possibility of introducing a Regulation that would facilitate and streamline cross border successions.

Due to existing problems with regards to companies competing for the undertaking of public projects, on the 28th September 2015 the Cabinet decided to give an end to the scandals involving the squander of millions of public money by approving an amendment Bill, which would add to the conditions for public tenders, the requirement of providing a Criminal Record Certificate for legal entities. Until today, this was not required due to gaps and loopholes in the existing Law. Provided this Bill will be passed into Law by its publication at the Official Gazette of Cyprus, companies applying for public tender will be asked to produce a certificate that would show they have a clean criminal record.

Lis Alibi pendens is Latin for "suit pending elsewhere". Both Articles 27 and 28 of the EU Regulation 44/2001 regulate the existence of lis alibi pendens and related judicial actions. In particular it is a doctrine that regulates the jurisdictional relationship of courts hearing concurrent proceedings involving the same or related causes of action between the same parties pending in the courts of different Member States.

The significance of the EU Regulation 44/2001 is well known as its rules determine both the jurisdiction of courts in the EU in civil and commercial disputes and the conditions for the recognition and the enforcement of their judgments in other EU member States.

Our MD Mr. Soteris Pittas attended a seminar organised by the Ukrainian Bar Association and the Association of Judges of Ukraine in KIEV 02-11-2015 Our MD Mr. Soteris Pittas attended a seminar organised by the Ukrainian Bar Association and the Association of Judges of Ukraine at the premises of the High Specialised Court of Ukraine for Civil and Criminal Cases. The topic was "Application of New York Convention for Recognition and Enforcement of Foreign Arbitral Awards".

Our MD Mr. Soteris Pittas attended as a speaker, the International Conference “KIЕV ARBITRATION DAYS 2015: Think Big!” held on 05-06 November 2015, in Kiev, Ukraine, under the auspices of Ukrainian Bar Association.

In House Seminar for the Employees of SOTERIS PITTAS & CO LLC & MAGNUMSERVE LTD The personnel of SOTERIS PITTAS & CO LLC and MAGNUMSERVE LTD, attended the In-House Seminar "Basic Principles of Corporate Law - with the hint of Business Law and Practice" which was successfully held on the 18th of December 2015 at our premises MAGNUM HOUSE by the Firm's Senior Legal Consultant, Mrs. Liza Bokova.

In House Seminar for the Employees of SOTERIS PITTAS & CO LLC & MAGNUMSERVE LTD The personnel of SOTERIS PITTAS & CO LLC and MAGNUMSERVE LTD, attended the In-House Seminar "Case Management" which was successfully held on the 27th of November 2015 at our premises MAGNUM HOUSE by the Firm's Managing Director, Mr. Soteris Pittas.

In House Seminar for the Lawyers of SOTERIS PITTAS & CO LLC The lawyers of SOTERIS PITTAS & CO LLC, attended the In-House Seminar "Service of Court Documents" which was successfully held on the 4th of November 2016 at our premises MAGNUM HOUSE by the Firm's Associate Lawyer, Ms. Nada Starovlah.

In a recent decision of the District Court of Nicosia, it has been held that Cyprus Courts have jurisdiction to adjudicate on applications for enforcement of foreign judgments and foreign arbitral Awards, even if both the judgment creditor and judgment debtor reside outside Cyprus.

The European Court of Justice (‘ECJ’) in the Gazprom Case (2015) held that anti-suit injunctions issued by arbitral tribunals in relation to the pursuit of Court proceedings within the EU, are not incompatible with the Brussels Regulation. The ECJ held that the BrusselsRegulation does not prevent a Court in an EU Member State from recognizing and enforcing an award containing such an anti-suit injunction, either pursuant to national law, or the New York Convention.

In the English case of Derby& Co v Weldon (No3 and 4) (1990) Ch 65, the Court of Appeal held unequivocally that a court can order a defendant’s assets to be frozen even if they are situated outside of the jurisdiction. However what is vital to be established in such circumstances is:

In a recent decision of the Cypriot Court of Appeal in COMMERZBANK –V- ADEONA, it has been inter alia held that the duty of an applicant to disclose at an ex parte hearing of an application, extends to the relevant law and applicable legal principles to the case.

In a recent decision of the Cypriot Court of Appeal in COMMERZBANK –V- ADEONA, it has been inter alia held that the duty of disclosure of an applicant to an ex parte application, extends also to the without prejudice correspondence of the relevant parties.

In the recent case RE: ANTONAKIS ANDREOU & CO LLC, a Supreme Court Judge, in Certiorari proceedings, cancelled a warrant issued against a lawyer and his law firm, for the search of the lawyer’s premises, on the ground that the law firm withheld certain important documents, relating to the alleged commission of serious crimes, by a client of the law firm.

In a recent decision of the English Commercial Court in ESSAR SHIPPING LTD –v- BANK OF CHINA LTD (2015) it has been held that an applicant to an anti-suit injunction shall act promptly and not sleep on his rights.

In a recent decision of the District Court of Nicosia, it has been held that Cyprus Courts have jurisdiction to adjudicate on applications for enforcement of foreign judgments and foreign arbitral Awards, even if both the judgment creditor and judgment debtor reside outside Cyprus.